By Oliver Kazunga
Government should start developing a clear monetary plan for the introduction of local currency at the appropriate time when necessary measures have been put in place, an official said yesterday.
The country adopted a multi-currency system in February 2009 to tame the hyperinflation that prevailed at the time.
Speaking at the Institute of Chartered Accountants of Zimbabwe meeting at the Zimbabwe International Trade Fair in Bulawayo yesterday, Confederation of Zimbabwe Industries (CZI) immediate past president, Mr Busisa Moyo, said given the level of confidence that has been attached to the new political administration, a clear roadmap should be made for the introduction of a local currency.
“We need a clear plan to our own currency. It must not be done in isolation and there should be monetary, reserve, productivity and fiscal targets. I think it must be put out there and this is work as private sector we should encourage Government to do to start targeting what is the path to getting our own currency back,” he said.
This, Mr Moyo said, was important for boosting export competitiveness of local industry as well as addressing the prevailing foreign currency and cash challenges.
Last December, the Government said it was working with friendly nations such as China and South Africa to reinvigorate the economy to levels that allow for the re-introduction of a local currency.
Responding to questions from the floor, Mr Moyo said a clear roadmap for the introduction of a local currency was helpful because of the confidence investors and the generality of people have under the new political dispensation.
“People are more confident in this new dispensation whether it’s really a perception or whatever reasons, I won’t get into that but there is confidence. There is still some work to be done in terms of confidence and so you will find that exports are the primary sources of currency,” he said.
“How do exports come about? A company has to be export competitive to generate exports and if your costs are high, you cannot generate exports. And currently our cost base in dollars (United States dollars) is very high compared to regional countries.”Mr Moyo said the cost drivers study conducted by Government in October 2014 revealed Zimbabwe was 45 percent more expensive than its regional peers and at that time the South African rand was still strong.
“With a weaker South African rand, it’s even worse so, we have got a problem as we are not export competitive. This is where we have to ask ourselves that surrounded by these softer regional currencies, what is our chance of generating or increasing exports from $4 billion to $6 billion,” he said.
Mr Moyo said it was imperative for the country to tackle the currency issue to encourage companies to export.
“Let’s look at the whole multi-currency system itself and say isn’t it time to make some choices that are supportive of industry and exports,” he said.
CABS managing director Mr Simon Hammond said the prevailing foreign currency shortages were not something the country could solve overnight but efforts to improve exports should be made.
“Foreign currency at the moment remains very short unless there is someone out there who can put $2 billion into the bank. That can certainly stabilise foreign currency shortages on the market.
“Because of this imbalance between the parallel and official market rates, a foreign investor, if they put in their money at the moment, l think it will be in the form of capital equipment,” he said. The Chronicle